DOGE Halts $1.5 Billion in IRS Contracts as Modernization Effort Lags Decades Behind
The Department of Government Efficiency has paused IRS modernization investments, citing outdated infrastructure, contractor dependency, and a $15 billion budget overrun.
- The IRS modernization program, initiated in 1990, is 35 years behind schedule and $15 billion over budget, with no clear completion timeline.
- DOGE has canceled $1.5 billion in contracts deemed wasteful and paused further modernization spending to reassess strategies.
- Outdated IRS systems rely on decades-old COBOL and Assembly mainframes, creating challenges for modernization compared to private-sector banks.
- Approximately 80% of the IRS’s $3.5 billion annual operations budget is spent on contractors, raising concerns about inefficiency and accountability.
- Treasury Secretary Scott Bessent and DOGE representatives have criticized entrenched interests and systemic inertia for perpetuating inefficiencies within the IRS.
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